COT report on Silver (Updated)

Some interesting developments in this week's Commitment of Traders (COT) report for Silver.

For those who aren't aware, the COT report is issued by the COMEX and provides information about whether speculators are long or short on paper silver contracts.

At the close of business each Tuesday (although the report itself is released on Friday), the COT report records the long and short positions of three categories of market-user: commercials, non-commercials and non-reportables.

When you look at these reports you will see that 8 or less large traders hold a net short position equal to 227.9 million troy ounces of silver.  The report also breaks down the totals for 4 or less large traders and the '4 or less' traders is now 212.7 million ounces.

As we have detailed before, the '4 or less' category is completely dominated by JP Morgan.

The big news is this weeks report is that when you compare this report to last weeks report, the '4-or-less' category is down 50.8 million ounces.

Yes... you read that correctly. The Commercial net short position in this report shrank by a whopping 10,158 contracts which represents 50.8 million ounces. This is possibly the biggest one-week decline in open interest in silver, ever !!

This is huge news.

If you extrapolate the 10,000 or so contract decline in silver's open interest that's been reported in the daily reports for Wednesday and Thursday (after the period covered by this latest report)... it's obvious that JPMorgan et al are running for the hills with their short position on Silver.

And when you consider that the price of Silver is almost at it's highest levels in history, this will be costing JP Morgan a fortune.

Which raises an interesting question which you may wish to ponder if you are having doubts about where the price of Silver is going.

If Silver has 'topped' and can only fall in value from this point, why would JP Morgan scramble madly to cover a record breaking number of shorts when Silver is near it's highest price in almost 5,000 years?

(The same thing occurred in Gold this week)

If you are JP Morgan and you know the price of Silver and Gold is going to be going down, why cover record numbers of contracts at these high prices?

It doesn't take a Ph.D to analyse this. It only make sense to cover massive amounts of short contracts (... and let's emphasize that we just had the biggest one week decline in open interest EVER!) if you are worried the price of Silver and Gold is about to shoot much, much higher.

May is going to be an interesting month.

Update

If you haven't noticed, Silver (and Gold) have opened on the GLOBEX with dramatic drops.

Have the fundamentals changed?  Has Soverign Debt been resolved?  Or are desperate bankers taking desperate measures to crush the paper price of Silver? 

Let's see if Silver is on sale in North America by morning.



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